How to Improve Your Credit Score

Improving your credit score is a smart thing to do. With an improved credit score, you have more options and you will end up spending less money in interest. Fixing your credit score may seem hard at first, but after awhile it gets much easier. The first step is to get a free copy of your credit report from the three major credit bureaus - Equifax, Experian and TransUnion. Look the reports over for any mistakes. If you find some, report them to the bureau and have them remove it. Once that is done, you can start fixing the things that are accurate.

Pay Those Bills

Because your current payment history makes up about 35 percent of your credit score, making payments on time is important. Credit companies look at when you make your payments and when you don't make your payments. If you start making payments on time now, it will build up your credit. Although past due bills hurt your score, credit companies are more concerned with what you are paying on now. If you happen to make a late payment or miss a payment, it can dramatically drop your score from 50 to 100 points. A good idea is to have as many of your bills automatically taken out of your account or paying your bills online. Both are great ways to avoid late payments.

Pay Your Bills Down

Paying down your bills make your credit score look better. If creditors see a nice gap between what you owe and what your credit score is, it gets reported to the main credit bureau and makes you look good. If you are planning on applying for a mortgage, a car loan or any other major purchase within the next year, it's smart to start paying down your accounts. You'll not only show that you are responsible and pay your bills on time, you'll also end up with lower interest rates and more money in your pocket. Also, if you are in the habit of charging everything on your credit card, then stop. For the next few months before you apply for that loan, pay for as much as you can in cash.

Ask For Help

Sometimes fixing your credit can be so overwhelming that you don't know where to start. That's where credit counseling centers can help. Credit counseling centers are non-profit organizations that become the middleman between you and your creditors. These centers can organize your bills and develop a plan of attack to help you lower your payments and possibly make one lump payment a month. It saves you a lot of money and helps with the stress of figuring everything out.

Don't Declare Bankruptcy Out Loud

The worst thing you can possibly do to your credit score is declare bankruptcy. It can drop your credit score up to 200 points! Getting a loan or any type of credit is next to impossible and stays on your report for almost 10 years after filing bankruptcy. Recently, laws have made it more difficult for people to file for bankruptcy as some people thought this was a way to get out of paying their bills. If you feel that you have nowhere else to go, try a credit counseling center first. Getting help before things get out of hand is a great first step.

Improving your credit score shows your creditors and the credit bureau that you are trying to improve your credit. Having good credit can save you a lot of money and make you feel responsible. Make sure you pay your bills on time, that you only charge when necessary, and ask for help if you need it. Following these few steps can ensure you a good credit score.